Banks: Draft Directive on Large Exposures Issued for Comment

Posted 19 May 2025 Written by Acts Online
Category Financial Sector

Brought to you by SA Legal Academy: The Prudential Authority (PA) has invited stakeholders to comment on a draft directive regarding the approval, measurement, and control of large exposures.

In terms of the Banks Act, No. 94 of 1990, the PA is seeking to align the South African regulatory framework with the Basel Committee on Banking Supervision’s (BCBS) revised standards for large exposures. The proposed directive will only become effective upon the operationalisation of amendments to the regulations relating to banks, specifically those impacting market risk framework requirements.

The draft directive focuses on the following regulatory areas:

  • The criteria and processes for the approval of large exposures by a bank’s board or designated committees;
  • The methodology for measuring exposure values across different asset classes; and
  • The implementation of robust internal controls to monitor and manage concentration risks.

Stakeholders and interested parties are required to submit their comments on the draft directive to the Prudential Authority by no later than 26 June 2025.

What this means for you, your business, or your clients

  • For yourself: No direct individual obligations; professional focus should remain on monitoring the transition from current exposure limits to the revised BCBS-aligned framework.
  • For your business: Compliance and risk functions within banks must evaluate the draft to determine necessary updates to internal exposure monitoring systems and reporting templates.
  • For your clients: Corporate and institutional clients of banks should be advised that the revised measurement methodologies may impact the availability of credit lines or the structuring of large-scale financing.

Originally published at https://legalacademy.co.za/news/read/banks-draft-directive-on-large-exposures-out-for-comment

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